Why Remodeling Your Home Is Worth It

If you are considering selling your home at any point in time, please read through this post because it will be very beneficial to you. Two years in a row now, the cost compared to retained value of remodeling your home has gone up. What does this mean? Basically, it is becoming increasingly profitable to remodel your home in one way or another. Every 20 years or so there is a need for remodeling due to obvious reasons; trends change and styles go out of style. Now is that time! New buyers are putting stress on new types of features. As a real estate agent out in the trenches seeing multiple homes every day, I can testify to the fact that most homes out there need some type of remodeling. The homes that sell quickly and for the highest prices are the ones that have been recently remodeled and updated.

What do I mean by remodeling? Remodeling includes projects such as the following:

- Remodeling the attic for an extra bedroom (Average project cost: $49,438; cost-to-value ratio 84.3%, an increase of 15.6% compared to 2013.)

-Remodeling (finishing) your basement (Average project cost: $62,834; cost-to-value ratio 77.6%, an increase of 10.4% compared to 2013.)

Although these are very beneficial remodeling projects, you may not be willing to spend those amounts at this point in time. If you are considering selling your home very soon, you may want to look more into replacement projects with the best return on investment. Some of the best replacement projects you can do are replacing the windows, siding, roofing, and the garage door(s). However, the most important and cost efficient replacement project:

- Entry door replacement (steel) - this replacement will return approximately 96.6% of the cost into your pocket. There is a low initial cost to replace the entry door and it adds a tremendous amount of curb appeal (Also, the entry door is the first thing the buyer will notice before walking inside and the first impression is CRUCIAL.)

One more aspect to consider which will add a lot of value to your home, as well as having the largest increase in percentage of cost-to-value ratio: back-up generator. These past years have been a flurry of storms, whether it be rain, snow, wind, etc. power outages have been way to frequent for people's liking. A back-up generator, more than anything else, adds security and comfort to a home. It would be well worth the effort to have one installed on your home.

[chart and statistics research found on http://www.remodeling.hw.net/cost-vs-value/2014/trends]

Top Factors To Consider Before You Buy A Home

   
     Whether you are a first-time home buyer entering the market or a seasoned homeowner jumping into the market yet again, there are a few factors that NEED to be considered before you put your signature down.

Financial Status

     First and foremost you need to be fully aware of your financial status, because knowing your financial boundaries is key. If you need a mortgage then it is best to contact a mortgage representative as soon as your ready to begin your home search. The mortgage representative will go over your finances and come up with a price range that you will be able to afford. If you do not need a mortgage or would like to begin figuring what your financial status is on your own, then here is a list of considerations for determining your affordability; Cash available for downpayment, your monthly income, your current debt, and your monthly expenses. Also, your credit score is a key role in your ability to obtain a mortgage as well as a determining factor in what your mortgage rate will be. Better credit means lower rates, so if you have any issues on your credit history be sure to resolve them before you apply for a loan.

Real Estate Agent
     Not everyone will utilize a real estate agent, however I would highly recommend it. From negotiating to utilizing the best vendors, real estate agents can help for a smoother process with less stress and a more beneficial outcome for you. Also, as a buyer you will not be covering any of the commission costs towards the agent because the seller is responsible for that. There are countless reasons to use an agent BUT you need to be very carful to pick the right agent for the job. There are bad apples in every bunch so you need to do your research; search online, ask family and friends for recommendations, and do not be hesitant to interview a few different agents before you make your choice. The agent will be working with you throughout the entire home buying process, so make sure you choose an agent that you can get along with. Also, make sure the agent you choose is familiar with and knowledgeable in the area you are searching.

Location
     Once you have chosen the town or city you will be moving into, the next step is figuring out what part of that town or city is most suitable for you. Make some time to drive through different neighborhoods during all different times of the day and week in order to get a feel for all the areas. Keep an eye out for factors such as traffic patterns, noise levels, and social behaviors. If you happen to see some of the locals outside do not be afraid to stop by and ask their opinion on the area as they would know best.

Utility Costs
     Utilities can really add up for a home and you need to know every expense that you will be incurring to make sure you do not get stuck in an unfavorable situation. Question the seller not only on the amount of yearly expenses but on their frequency of use as well. Not every person lives the same way; the current seller could say that the utilities are low, but the reason for that could be that the seller does not make much use of the utilities. If low utility costs are a main focus of yours then you may want to search for homes with updated, high efficiency appliances.

Resale Value
     The resale value of the home is typically something that is overseen by the buyer, however it is definitly one of the most important aspects of a home purchase. A home is typically the largest purchase you will ever make, therefore you need to make sure you are making a sound investment. Do as much research as you can to develop an estimated future value.

Escalation Clause: A Buyer Tool That May Be Valuable In Today's Housing Market

     As I mentioned in my previous post "Looking For A Home? What To Know & What To Expect" I explained the state of the housing market right now and what you should be expecting as a buyer looking to purchase a new home. Today's housing market is faced paced and if you hesitate at all you may lose the home you are hoping to close on. The "Escalation Clause" may be a useful tool in this type of market, but be careful when utilizing it because it may add more complication then necessary.
     What is an escalation clause? Well, it is quite a simple concept actually and may be the difference between obtaining or losing your dream home when you are in competition with another offer. An escalation clause (Also referred to as "escalator" clause) allows the buyer to submit an initial offer price (x), and if the seller receives an offer higher than that price, the buyer is willing to raise their offer to (y). The three main factors of an escalation clause include the original offer price, the amount that price will be escalated above another competitive offer, and the maximum amount the offer price can reach. 
     Here is an example of what an actual escalation clause would look like: Mr. Buyer submits an offer on a home for $400,000. Mr. Buyer's real estate agent adds an escalation clause that, in the case of a higher competing offer, will raise Mr. Buyer's offer in increments of $1,000 above the competing offer. Mr. Buyer's escalation clause has been set to only be able to reach a maximum of $415,000. So, if a competing offer comes in at $405,000, Mr. Buyer's offer will automatically go to $406,000 due to the escalation clause. If a third offer comes in at $410,000, then Mr. Buyer's offer will increase to $411,000. The amount will not be allowed to exceed $415,000, therefore if one of the two competing offers is raised to $416,000, Mr. Buyer will no longer be in contention for the home. Also, if no competing offers are submitted on the home, Mr. Buyer's original offer at $400,000 will stand.
     Although the concept is simple, using it in a real life situation may be more difficult than you think. Not all sellers will be comfortable with an escalation clause contract because it diminishes the possibility of a true bidding war. It also can be a risky move for the buyer because you are literally putting all your cards on the table and showing your hand. If a buyer is to offer a contract with an escalation clause and no other competing offers come in, the seller's agent will know exactly what the buyer is able and willing to spend on the home and the buyer loses all negotiation power. Therefore, the buyer NEEDS to be very confident that multiple offers will arise on the property in question.
     Every single situation is unique, please consult your real estate agent before deciding to use an escalation clause.